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Mostotrest won another tender for building of Moscow-St Petersburg highway

First publishedin World Highways
January February 2014
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Gennady Timchenko is head of one of Mostotrest’s leading Russian competitors
Gennady Timchenko is head of one of Mostotrest's leading Russian competitors Most and was beaten on this contract, but will likely tender for future highway sections
As expected by analysts, Mostotrest, owned by the Rotenberg brothers, won the tender for the construction of the sixth and longest section of the Moscow-St Petersburg highway. Under the conditions of the tender the company will build 209km of the highway (334-543km), which will pass through the Tver and Novgorod regions of Russia. The cost of construction is 144.6 billion Rubles (US$4.51 billion), 16 billion of which will be invested by Mostotrest, while the remainder will be state-funded.

The duration of the contract is 26 years. The road should be built during the next four years prior to the 2018 World Cup and will be maintained by the government during the next 22 years, which will allocate about 29.8 billion Rubles for these needs.

According to Alexander Nosov, deputy chairman of The State Company Russian Highways (Avtodor), the company, which is responsible for the development of Russia’s national high speed highway network, the tender was conducted in a very short time. Nosov said, “The tender was carried out very quickly, due to the fact that the contract will have a form of a long-term investment agreement, instead of concession, which means that tender procedures for such agreements are less stringent.

Projects on the basis of long-term investment agreements are generally implemented faster than concession, while the difference in the timing of implementation is about two years."

The project involves building of 44 bridges with a Total length of more than 4km; 63 overpasses with the Total length of about 4km, including 22 overpasses over the highway and nine within transport interchanges; six complex interchanges (including road exits, U-turns and roundabouts . The contract also involves building of charging points and installation of equipment.

The road will be comprised of four lanes of the IA category, designed for speed up to 150km/h. Some of its sections will be tolled.
During the tender Mostotrest was able to overtake another bidder for the contract - Most company, which is affiliated with Gennady Timchenko, another Russian billionaire, which asked RUB 148.8 billion for the contract and lost out to Mostotrest on the final score. According to an official representative of Most, the company has no plans to challenge the results of the contest.

According to Mostotrest plans, the volume of investments in the project at the initial stage will amount to 15.96 billion Rubles.

The commissioning of the road section is scheduled for May 2018. Mostotrest will operate and maintain the road until 2039.

During the operational stage the company will receive 28.9 billion Rubles/year in the form of maintenance charges.

According to Vladimir Vlasov, general director of Mostotrest, currently the company is completing preparations for future construction, which is expected to start soon. Vlasov said that the company is currently focussed on the construction of a bypass in Vyshny Volochyok, a town in Tver Oblast, through the which the new highway will pass, which will allow it so save on costs associated with the deployment of resources and sustain the timing of the implementation of the project.

Implementation of the project will involve the use of new road building technologies, such as IT and other technological solutions from Spanish company Indra, and will comply with all the existing ecology standards. It will not only involve building of all the infrastructure needed for a project of this kind, such as rest areas and service stations, but also for equipment storage required for operation of the site. The latter is an acute need and should avoid last year’s situation, when heavy snow paralysed the existing M-10 federal highway connecting Moscow and St. Petersburg, and continuing to the border with Finland.

Winning of the tender means that, taking into account the previously obtained contracts, Mostotrest will build almost half of the 669km highway.

In 2011 the company was selected as a contractor for the building of the 72km section of the highway (258 -334 km), bypassing Vyshny Volochyok. Total cost of this project is estimated at 46.5 billion Rubles (USD$1.45 billion).

The company is currently completing building of the section, which required 14 million tons of sand and 500,000tonnes of asphalt. The project involves building of four main lanes, three major overpasses on the site and another 22 located above the road and built for crossing of the locals.

Also in 2012 Mostotrest purchased 50% of the North-West Concession Company, which built the 43.1km head section of the highway, which passes through the Khimki and Solnechnogorsky districts of the Moscow region. The other 50% of the joint venture is owned by VINCI Group.

In the meantime, according to an official representative of Avtodor, it is currently completing prepations for the organisation of the tender for the building of other sections of the highway.

An official representative of Avtodor’s press service commented, “We started with the sections that bypass the most congested areas of the M-10 federal highway and will soon choose contractors for building other sections of the highway. We can Confirm that the interest for building of the highway is steadily growing. So far, among the bidders for the building of the next 543- 684km section of the highway, which is located on the entrance to St. Petersburg are four large consortiums.”

The first consortium is known as Capital Tract and is comprised of The Russian Direct Investment Fund, a $10 billion fund established by the Russian government to make equity investments primarily in the Russian economy, Gazprombank, the third largest bank in Russia, and Macquarie fund.

Among the participants of the second consortium, named as Roads Construction Corporation, are such companies as Sacyr Concesiones, a leading Spanish construction company, as well as Russian Autobahn and Khanty- Mansiyskdorstroy companies.
The third consortium is named as Highway of the Two Capitals and includes such companies as VTB Capital IB holding, the Investment Business of VTB, one of Russia’s largest banks, Vinci, and the joint venture of Turkish Ictas Insaat and Italian Astaldi.

At the same time the fourth bidder for the contract is an international construction company Corsan-Corviam, which is part of Groupo Isolux Corsan. The winner will be selected in the spring of 2014. The period of implementation of the project is 2015-2017. The amount of the contract is 83.1 billion Rubles, of which at least 25% will be funded from its own, and borrowed funds, of the concessionaire. The project will be implemented under a concession agreement. The duration of the contract is 27 years. The new road will be tolled, with the tariff for passenger cars set in the range of RUB 1,75-2,60 ($0.05-0.08)/km.
By the end of the current year Avtodor also has plans to announce the tender for the building of the 58-149km section of the highway, worth up to 67 billion Rubles.

After this the contractors for the two sections of the highway will remain unselected and in particular for the 149-208km section, which has a length of 59km, bypassing Tver and 208-258 km, with a length of 50km, bypassing Torzhok,  a town in Tver Oblast, located on the Tvertsa River along the federal highway M10.

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